The American struck gold in the 4x100 metres freestyle relay after he flopped out of the individual 400m freestyle, won by Australian Grant Hackett, who created his own legacy by becoming the first swimmer to win gold medals at four world championships.
Australia won a second title on Sunday with an expected victory in the women's sprint relay while French teenager Laure Manaudou overcame a bout of nerves to win the women's 400m freestyle and add the world title to the Olympic crown she captured at Athens last year.
Roland Schoeman, part of the South African team that spectacularly ruined Phelps's campaign for eight golds in Athens, set a world record in the semi-finals of the men's 50m butterfly on Sunday, stopping the clock at 23.01 seconds to wipe 0.29 off the previous record established by American Ian Crocker in Austin last year.
Phelps had been one of the favourites in the 400m but faded so badly at the end of his morning heat that he finished 18th overall and had to watch the final from the stands.
With Ian Thorpe taking the year off, there was no-one left to mount a serious challenge to Hackett and the undisputed king of long distance swimming obligingly cruised to his first 400m world title after finishing runner-up to Thorpe at the previous three world championships.
Russia's Yuri Prilukov was second while Oussama Mellouli of Tunisia came home third.
"It was a shame that Ian and Michael weren't there in the final but I really wasn't thinking about that too much," Hackett said.
"I did put a little bit of pressure on myself because I wanted to get the team off to a good start so given all the circumstances I was pretty happy with myself and the job I did."
Phelps did not have long to dwell on his disappointment after he was ordered to lead-off the U.S. relay and he responded with an opening split of 49.17 that gave his team a handy lead which they never relinquished, finishing ahead of Canada and Australia.
"Michael did a great job tonight leading off the relay and rebounding back from the disappointment and I think that makes him the champion that he is," U.S. head coach Dave Salo said.
"I think it was good for Michael to have that experience and it will make him better and it also makes the (U.S.) team better because the team recognises that we can't rely on Michael all the time."
PERFECT START
Hackett's victory provided Australia with the perfect start to the eight-day championships and they finished the opening night on top of the medal standings with a rousing victory in the women's relay.
The quartet of Jodie Henry, Alice Mills, Shayne Reese and Libby Lenton showed their rivals a clean pair of heels as they sped to gold to add the world title to their Olympic success last year.
Germany finished second while the United States came third after Natalie Coughlin had given them the lead at the first changeover.
"It's an amazing achievement to win at the world champs but nothing can top last year," Mills said. "There's something about the Olympics that makes it that little bit more special."
Manaudou also completed the Olympic-world double but unlike her confident victory in Athens, she had to fight all the way to win the women's 400m freestyle final.
The 16-year-old's hopes of winning had seemed remote when she barely scraped into the final in eighth spot and had to swim from the outside lane.
She had complained of tiredness in his legs and was convinced she couldn't win but defied her own predictions with a brave performance.
Setting off at a cracking rate, she reached the halfway mark under world record pace, then held on to grimly to beat the fast-finishing Japanese Ai Shibata and British teenager Caitlin McLatchey.
"That was a hard day," an emotional Manaudou said. "I needed my family to support me and I had to find a trick to keep my spirits up."
